CONSUMER WATCH: The downside of voluntary repossession

Nedra Peyton of Richmond, a working mother of two small children, purchased a used car in October.

She agreed to make payments every two weeks for three years. She had no experience buying cars. The car came with a 180-day limited warranty.

Within the first month, Peyton said, the car broke down twice and had to be towed to the place she bought it for repair. It also was missing a heating and air-conditioning part and she said the front end was making a rubbing noise.

Each time she took the car back, the repairs were made but she was given a hard time, she said. The second time it was towed, she angrily told them to keep the car and refund her money.

She was told that if she left it, it would be a voluntary repossession and she'd still have to pay the note.

A voluntary repossession means the person voluntarily gave the vehicle back for whatever reason as opposed to it being involuntarily repossessed.

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If this happens to you or someone you love, what should you do?

John C. Gayle Jr. of The Consumer Law Group on Libbie Avenue in Richmond responded.

Gayle cautioned against abandoning a newly purchased car at the dealership. "It doesn't make any sense," he said. For one reason, "it goes on their books as a voluntary repossession." That negatively impacts a person's credit score.

Steve Katz of the credit reporting agency TransUnion in Chicago and Rod Griffin of Experian in Dallas said whether it's a voluntary or involuntary repossession, a person's score will be impacted equally.

A repossession is "very, very bad," Griffin said. Another reason not to abandon the vehicle is the dealer may have misrepresented its condition at the time of sale.

If you've given it back, "How are you going to prove anything?" Gayle said.

Dealers resell repossessed vehicles at auction for whatever they can get, then come after the one it was repossessed from to collect the difference.

If a newly purchased used car turns out to be a clunker, you can sue under Virginia's so-called "Lemon Law" only if you bought it while there was still time left on the original manufacturer's warranty.

You have up to 18 months from the date that the warranty first went into effect to sue, Gayle said.

If you've purchased a used car that turns out to be a heap:

• Read your contract. If it says you purchased the car "as is," you're responsible for repairs and the dealer has no obligation to assist with repairs.

• Stay current on your payments. If you're late, the dealer has the right to take back the vehicle and sell it.

• You may be able to rescind the sale. "You really ought to get an attorney's advice" before doing this, Gayle said.

But, if you can't, stop driving the car and put the dealership on notice, by certified mail, that in 30 days you intend to rescind the sale unless it corrects the problem.